Showbiz not always recession proof

Film and theater can have their ups, downs

Like most pieces of conventional wisdom, it’s been repeated so often it’s accepted as fact. But this one is not quite true, as was evidenced again last week by the glum quarterly earnings of the major showbiz congloms.

The truism most likely got its start during the Great Depression, when the stock market crashed in 1929 and film attendance thrived. The thinking was: People needed to forget their troubles, and so they went to the movies.

Forgotten in this assumption is that technology, not escapism, saved the day. The advent of sound made “talkies” a novelty and, two years after the release of “The Jazz Singer” in 1927, the public continued to flock to the Roxy to hear, for the first time, their favorite stars.

But Broadway never experienced the temporary reprieve that Hollywood did: The crash of ’29 drained the Rialto investment pool, and the number of new productions went from 276 in the 1929-30 season to 175 in 1930-31.

Legit similarly took a hit during the ’72-’74 and ’91-’93 recessions. And while box office was robust for some shows during the just-wrapped season, it wasn’t the unmitigated success that some have portrayed.

It’s been that way for both the film and theater biz throughout every economic downturn: Sometimes things are up, sometimes down, but the reasons are never as simple as “folks need to be entertained.”

While the rest of America reeled from the 1929 crash, Hollywood remained essentially unaffected until 1933, when the downturn caught up with the movie biz and only one studio, MGM, managed to eke out a profit.

Paramount came close to the edge of bankruptcy but was saved by its having signed Mae West, whose first two pics, “I’m No Angel” and “She Done Him Wrong,” did boffo biz at the box office. Had she signed with Warners or another studio, Paramount Pictures today might be a mere footnote in some showbiz-history tome.

Back in 1933, the year of FDR’s bank holiday, most studios were so strapped for cash that they imposed a 25%-50% pay cut for all employees. MGM’s Louis B. Mayer ordered his staff to follow suit out of sheer patriotic duty.

It remains a mystery how Broadway glommed onto the movie truism about the industry being immune to the economy’s woes. During recent recessions, Broadway has suffered, as evidenced by playing weeks — i.e., the number of shows multiplied by their weeks in performance, always a better indicator of economic health than inflation-jiggered B.O.

Playing weeks tumbled below the 1,000 mark during the 1972-73 and 1973-74 seasons, coinciding with that decade’s worst recession. The tally dipped below 1,000 again during the 1991-92 and 1992-93 seasons, reflecting another serious economic downturn.

Broadway proved a bit more resilient during the 1981-82 recession, clocking in an average 1,300 playing weeks during those two seasons. But it marked the beginning of a downward trend that bottomed out during the 1985-86 seasons, when it registered barely 1,000 playing weeks. Variety’s headline then: “Fabulous Invalid Still Sick: Broadway Season Off 8%.”

Again, there are underlying reasons more complex than a simple stock-market downturn: Many Broadway producers, creatives and actors were sick or dying of AIDS during those years. While the disease was not mentioned in the article, its impact was: “In terms of public excitement the 1985-86 Broadway season again was crippled by the absence of new musical hits.”

As movie people know, the quality or novelty of the product does impact B.O. and can sometimes make a recession seem to go away, if only momentarily.

Which brings us to the much-lauded 2008-09 Broadway season and the much-speculated-on upcoming theater season.

The 2008-09 receipts were up a marginal $7 million from the two previous seasons, with the caveat that the 2007-08 season had sustained a 19-day strike.

So how is this recession different? Or not so different?

Again, the answer lies not just in audience enthusiasm but in the ways the numbers are crunched.

Like many observers, legit lawyer-turned-producer John Breglio calls the 2008-09 season exceptional from an artistic standpoint — “which is what made it different from seasons past,” he says. “The high quality of the plays, revivals and new ones, and the high-profile stars is (why) we had a good season.”

What many now fear is that what the legit gods gaveth —well-reviewed plays — they can taketh away in the new season.

And from an economic point of view, Breglio is unenthused about recent tuners: “For musicals, it was not a good season,” he says. The only certifiable recouped hit is the low-budget “Hair,” capitalized at $5.75 million.

“Billy Elliot,” which opened more than eight months ago, has yet to return its reported $20 million investment and did not begin to sell out on a regular basis until after the Tony noms were announced. The $16 million “West Side Story” is months away from recoupment. So, while box office may be up a little, profitability is way down, with enormous losses tallied on failed shows, beginning with “A Tale of Two Cities” early in the season.

As for plays, with the exception of the occasional blockbuster like “God of Carnage,” which just went on a six-week hiatus, the new paradigm appears to be the star-driven 12-week run where investors “just want to get their money back,” says Breglio. “That’s just going to get worse and worse.”

Stars like Hugh Jackman, Daniel Craig and Jude Law look to turn the incoming “A Steady Rain” and “Hamlet” into immediate hits. It’s only for 12 weeks — “but just when we need them most, in September,” says Shubert CEO Philip J. Smith, referring to the worst B.O. month on the legit calendar.

But there’s another key factor that has made Broadway this season very different from that of previous recessions: the new premium-price ticketing system.

“It really only has a significant effect on four or five shows,” Breglio says. Regardless of how many shows actually benefit, the pricey tix have increased the overall Broadway cume “by at least 10%,” says Jujamcyn’s producing director, Paul Libin, who also believes they’ve increased attendance. “You used to have to go through a broker. They were harder to acquire. People didn’t know how to do it. Now you just walk up to the box office or make a phone call.”

Libin also mentions the computerization of ticketing as a major benefit over the old mail-in system, which may have stymied ticket sales in the 1970s and 1980s recessions.

According to Smith, premium tix can add as much as “$100,000 a week to the gross, if you’ve got a hot musical. A hot play, could be $50,000. An average musical you could expect $10,000 to $20,000,” with an average play benefiting much less.

Whatever. It is millions of dollars that used to flow outside the theater and now goes to investors and royalty holders and helps to buoy the overall Broadway tally.

“But the economics of the premium seats is a temporary fix,” says longtime producer Emanuel Azenberg. “Ultimately the theater will be a luxury, because at some point you hit a ceiling. It’s why you have 38 producers on a show, because you need $20 million to do a musical and $3 million to do a play.”

Azenberg may be right about the long-feared ticket-price ceiling. The late Beverly Sills maintained she watched the balcony, not the orchestra, to see if an opera was selling well. Her thinking is no longer viable. Just last season, the Met Opera, with its top-priced ticket of $320, felt the need to institute a donor-sponsored rush program to sell some of its orchestra seats at $25 a pop.

Breglio says $300 tickets on Broadway or at the Met “aren’t selling like they were three years ago.”

Nonprofit theaters have also worked magic to make the 2009 recession look like no other. As Lincoln Center Theater’s Bernard Gersten points out, “Three nonprofit theaters (LCT, Roundabout, MTC) now have Broadway-size houses. That’s a huge shift from 25 years ago,” when even Lincoln Center’s Vivian Beaumont was dark during the early 1980s recession.

Only five new productions were offered by the nonprofit sector in 1982-83, the same number offered in the 1990-91 season. Last season, that number topped 10.

“Our grosses are part of that Broadway cume,” Gersten says of the nonprofits. “Also, we bring at least half a dozen plays to the list, which helps fill up the (Tony) slots.”

In the 2009-10 season, the overall B.O. tally should benefit from two nonprofit tuners, the Roundabout’s “Bye Bye Birdie” revival this fall and LCT’s new “Women on the Verge of a Nervous Breakdown” in the spring. Add to that at least eight plays.

Those productions will add dollars that have nothing to do with profits, and should push Broadway’s total tally to more than $1 billion for the first time ever — making the ongoing recession look a lot kinder than it really is.